Supply Chain Digest Says...

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But penetration thus far has been low, with high costs for the vehicles (though sometimes offset by government subsidies in the past) and questions around filling station development among the barriers to widespread use.

The last data SCDigest can find shows that around 12,000 fuel cell trucks were either sold or on order as of May, 2016 going all the way back to 2009, about eight years. That compares to about 140,000 lift trucks (both electric and all types of internal combustion) sold just in 2015 alone, with other estimates putting fuel-cell trucks with only a little above a 1% market share in 2016.

But that may change after a couple of the heaviest hitters in logistics make the move.

In April, Amazon announced that it had purchased the right to acquire as much as 23% of hydrogen fuel cell maker Plug Power, and that it would equip forklifts at 11 fulfillment centers this year with hydrogen fuel cells. Amazon will spend $70 million on the deal in 2017 and likely twice that next year, Plug Power CEO Andy Marsh said at the time. Amazon will acquire stock warrants tied to cash payments to the company.

Walmart had already been a Plug Power customer at the time, but it upped the ante in July after the Amazon move by signing a nearly identical agreement, except that the initial warrants provided were given a higher exercise price of $2.12 per share compared to the $1.18 per share exercise price given to Amazon. The difference is due to the fact that Plug Power's shares have risen about $1 per share since April when the Amazon deal was signed.

Under the agreement, Plug Power should add 10 new Walmart distribution sites to its GenDrive fuel cell fleet, which will equate to $80 million in added revenue. Plug Power's total revenue for 2016 was $85.9 million. The net loss for the year was $57 million.

In 2014, Walmart had announced the purchase of 1,738 hydrogen-powered units for an estimated $50 million, adding to 535 hydrogen fuel cell lift trucks already in its fleet.

Plug Power also said that as in the Amazon deal, it plans to collaborate with Walmart on technology development, although Marsh has not explained the exact nature of that collaboration, citing confidentiality agreements.

Although a forklift outfitted with a hydrogen fuel-cell pack costs up to $58,000 - about twice as much as a battery-powered truck - hydrogen models are about 10% less expensive over the 10-year life span of an average forklift, according to a 2013 study by the National Renewable Energy Laboratory.

Plug says the cost advantage has improved further since the study, as the fuel cell technology advances..

The advantage of fuel cells comes from the fact that they can be charged in minutes instead of hours, eliminating the labor cost of charging batteries, and freeing up distribution space formerly occupied by large battery charging areas.

Fuel-cell trucks also perform better in freezer environments than electrics.

So with Amazon and Walmart jumping on board, the added volumes will likely drive the cost down for Plug Power cells and perhaps the cost of full trucks in general.

However, a federal tax credit for fuel cells expired at the end of 2016, meaning higher costs to companies wanting to adopt the technology.

Toyota Motor Corp., the world's largest forklift maker, is developing hydrogen-powered modetls and began using prototypes at one of its plants in Japan this year. Hyster-Yale Materials Handling Inc., another large lift truck maker, bought Nuvera Fuel Cells in 2014 and has begun incorporating the technology into its products.

So are we at the tipping point for widespread adoption of fuel cell lift trucks in distribution? SCDigest's bets the Amazon and Walmart deals will soon drive down the cost of the trucks, turbocharging market uptake.

Are fuel cell lift trucks ready for prime time? Will the Amazon and Walmart involvement bring prices down? Let us know your thoughts at the Feedback section below or the link above to send an email.

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Gavin

Title, Company

Posted on: Aug, 01 2017

It's likely that Amazon will also start looking at a fuel cell delivery fleet. This could be their future 'collaboration' with Plug Power.